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<h1>Tribunal allows depreciation claim on leased bottles, directs adjustment of lease rent.</h1> The Tribunal allowed the appeal of the assessee, directing the AO to allow the depreciation claimed on bottles leased out to another company and adjust ... - Issues:1. Reopening of assessment under section 1472. Disallowance of depreciation claimed on bottles leased out to another companyReopening of Assessment under Section 147:The case involved an appeal by the assessee against the order of CIT(A) relating to the assessment year 1991-92. The AO reopened the assessment under section 147 based on a search conducted on the assessee and a statement recorded from an individual regarding financial arrangements with another company. The AO disallowed the depreciation claimed on bottles leased out, leading to the belief that income had escaped assessment. The assessee challenged the reopening, but the AO proceeded, disallowing the depreciation on bottles while allowing it on machinery. The CIT(A) confirmed the reopening and disallowance. However, the Tribunal found the reopening and disallowance unjustified, as the lease transactions were genuine, supported by detailed accounts and transactions. The Tribunal directed the AO to allow the depreciation as claimed by the assessee.Disallowance of Depreciation on Bottles Leased Out:The AO disallowed the depreciation claimed on bottles leased out to another company, treating the lease agreement as sham. The AO withdrew the depreciation and added accrued interest to the assessee's income. The CIT(A) upheld this decision. However, the Tribunal found that the lease transactions were genuine, supported by detailed records of lease amounts and transactions. The Tribunal noted that the AO's adverse inference based on a statement from an individual not directly associated with the assessee was unjustified. The Tribunal held that the lower authorities were not justified in disallowing the claim of the assessee. The Tribunal directed the AO to allow the depreciation as claimed and tax the lease rent shown by the assessee against the interest income assessed by the AO.In conclusion, the Tribunal allowed the appeal of the assessee on merit, directing the AO to allow the depreciation claimed and adjust the lease rent against the interest income. The Tribunal did not adjudicate on the legal grounds of the assessee, as the appeal was allowed on merit.
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